BHS auditor shamed over pension fees

SHAMED bean counter PwC broke pension rules while advising Sir Philip green on his company’s finances, according to a damning report.

Accountants were in line to collect more fees the more workers they were able to persuade to change their pension benefits, the accounting watchdog said.

both PwC’s and the Pensions Regulator’s guidance says such fees – known as contingency fees – should not be charged.

Former pensions minister baroness Altmann said: ‘It’s an outrage. Contingent charging should have no place in a transaction that is supposed to be in members’ interests.’

The alleged arrangement emerged as part of a Financial Reporting Council report into PwC’s audit of green’s retail chain bHS before it was sold for £ 1 to serial bankrupt Dominic Chappell in 2015. It went bust one year later. PwC has been fined £10m for shortcomings in the audit including failing to warn of the risk that bHS might be on the brink of the collapse.

The FRC said PwC also worked on a pensions ‘incentive exercise’ for green’s wider Taveta group.

It is believed this involved members being offered a transfer out of the scheme to help reduce liabilities. Details have not been confirmed.

The FRC said: ‘The respondents’ fees for the pensions incentive exercise were related to and contingent upon the number of pension scheme members accepting the incentive. Contingency fee arrangements of that nature contravened guidance issued by the Pensions Regulator and by PwC itself.’

It is understood the exercise was not connected to bHS, whose scheme had a £571m black hole when the firm collapsed. An incentive exercise usually involves an employer trying to reduce risk or cost from a scheme by offering members the option to transfer out of the scheme or modify their benefits.

The Pensions Regulator worries that members may be disadvantaged by such exercises, especially if they do not get to make informed choices.

Altmann added: ‘If they were offering people more than a fair deal that might be fine, but if they were offering people more than a fair deal one has to wonder why they thought they needed incentives to recommend the transfer.’

PwC said: ‘Although described as a contingency fee, our fee for this work was actually less than if charged at our hourly rate. There has been no suggestion from the FRC that our objectivity was impaired and the quality of the work has not been called into question.’

Taveta had not commented last night. The Pensions Regulator declined to comment.